Hundreds of runaway foreign companies bring Vietnam regulations into question

TN News

Email Print

In the absence of proper regulations, more than 500 small foreign companies have successfully fled Vietnam after running into financial trouble here.

When reporters of Tuoi Tre (Youth) newspaper visited the headquarters of garment producer Ado Vina in the southern province of Binh Duong on August 13, the entire complex was closed and a bank employee had been sent by the firm's creditor to guard the assets.

The South Korean-owned firm opened for business in 2009 with a capital of US$1 million, but its owner has fled the country after incurring bank debts of over VND8 billion ($379,600). He also owed worker salaries and social insurance payments of some hundreds of millions of dong.

The Binh Duong's Planning and Investment Department estimates that nearly 20 investors in the province have disappeared since 2009. But the number is nothing compared to those in Ho Chi Minh City and Hanoi, where 166 and 105 investors have flown the coup, the highest figure nationwide.

Official statistics show that 518 foreign companies in Vietnam with a total investment of over US$903 million halted operations after their owners disappeared.

Insiders attributed the problem to the stagnant economy, the manufacturing index for which fell for the third monthly contraction in a row last month, according to HSBC.

But the Ministry of Planning and Investment officials warned that in a number of cases they found signs of scams. Foreign owners often ran away with the money they raised for businesses, they said.

Last month, hundreds of home buyers gathered at the headquarters of Minh Viet Investment Corp., owner of the housing project Tricon Tower in Hanoi, and demanded a return on their deposits after the company chairman embezzled over VND400 billion ($18.96 million) and fled the country.

RELATED CONTENT

Like us on Facebook and scroll down to share your comment

Although most of the projects with disappearing owners are small-sized, insiders worried that the problem would lead to long-term consequences.

Most of the deadbeat owners came from South Korea and China, the ministry said, adding that some even did not build their own facilities and had to rent factories. They were mainly in construction, real estate, trading, software, and food manufacturing.

Most of the companies with owners who fled reported debts owed to social insurance funds. Workers are then left in the lurch because they can't get back their social insurance cards from their former employer.

There is no official data on the number of affected employees. But no lawsuits lodged against the absentee investors have succeeded.

Besides, there are no regulations on recalling foreign companies' registration licenses, thus authorities are unable to recall idle land hired by runaway businesses and pass it on other companies who are in need.

Assets owned by foreign companies are protected under international commitments Vietnam has made with other countries, and Vietnam could be sued for its attempts to recall the assets left behind by runaway businesses.

The ministry has suggested that foreign owners, especially those of projects that have major socio-environmental impacts, pay deposits and that authorities be allowed to sell assets left behind by disappearing bosses via auctions.

Like us on Facebook and scroll down to share your comment

More Business News